This invention has in at least one embodiment an application to loyalty programs (LPs). LPs are designed as the name suggests is to create and maintain the loyalty of a customer to a particular product or service. The source of such services and/or products is also the issuer or distributor of the points to its customers and the redeemer of those points for rewards. LPs are based on the concept of influencing the customer to continue to purchase products and/or services from one source, whereby the customer is repetitively issued points and, over a period of time, will accumulate sufficient points that may be redeemed for a valuable reward.
There are now over 5 trillion LP points outstanding around the world. Annually 500 billion new points are issued. Each of these points represents real economic value to both the customer and the issuer. LP's which issue points must carry them on their balance sheets as a contingent liability (for example, Business Week has reported that in American Airlines' case this number is greater than $800 million). In some cases, LPs are also using points as a revenue-generating product that LP proprieters sell to marketing partners. There are four main types of loyalty programs: travel (airlines and hotels), financial (credit cards), retail and network (AirMiles, ClickRewards and WebMiles).
The number of LPs has exploded in recent years, thus making it difficult for customers to be knowledgeable about the plans, much less interested in participating in a LP. Presently there are over 90 LPs sponsored by the airlines, i.e., frequent flyer programs. There are hundreds of credit card programs sponsored by financial institutions. There are over 8500 LPs sponsored by retail companies. The number of customers who have participated in LPs is greater than 350 million. Globally, there are more than 200 million customers participating in frequent flyer LPs, of which 160 million customers participate in LPs sponsored by US airlines. 75% of the UK population carry a loyalty card, while 66% of Canadian households belong to LPs of AirMiles or Sears Club.
The issued points that have not been redeemed has now grown to staggering numbers. There are presently 3.5 trillion points in the market today in the North American LPs alone. 500 Billion new points are generated annually in frequent flyer LPs alone. Each point has an economic value, which can be expressed in monetary units per point. Accumulated in the numbers mentioned above, unredeemed points represent huge assets. In addition, unredeemed points represent a liability to the issuing entity in terms of the future cost to redeem these points. While presenting a liability to the point issuers, they also represent a huge asset base, which is growing annually, as most LPs are accruing more points each year than their customers are redeeming. This positive issue/redeem ratio is expected to continue in the future. Thus while the liability of many LP point issuers has increased, also has been the opportunity of generating revenue streams for many of the larger LPs. Presently, such large issuers have income from the sale of points to their existing customers, but also to other business entities.
LP points typically have a limited life from their date of issuance. Thus, many points will expire as a result of a lack of interest in participating in a LP plan. In 1998, 68 billion points expired. The lack of interest and participation results in part from the number of available plans, the complexity of a particular plan, the inability to readily ascertain the balances in the LPs to which a customer may belong and the relatively small value of the points. There are billions of points that sit in accounts with very limited redemption options and low utility to a customer, i.e., the points are kept in accounts with balance that are below redemption levels, or a levels with limited redemption options. The growing number of LPs have led customer to join a number of LPs, thus spreading the points issued to this customer among the many programs and preventing any one of these plans from accumulating a significant number of points. For the above reason, few customers are achieving significant value from the LPs thereby preventing a LP from meeting its goal of achieving customer loyalty to a particular source of products and/or services.
There are presently available a number web sites that offer services related to LP programs. MaxMiles MileageMiner is a website offering management services to frequent flyers. MaxMiles automatically gathers frequent flyer balances and account information from airlines, hotels, and credit cards, analyzes the most current mileage offers, searches for missing mileage credits, and sends a personalized report of all miles via email to the frequent flyer. The personalized reports are updated daily.
Miles Direct.com is a website that automatically gathers and reports all of your frequency and rewards balances from airlines, hotels, credit cards into one consolidated statement. Miles direct also tracks expiring miles or points, activity, and elite levels.
Points Universe is a website that keeps track of points, miles and other currencies in one statement. A customer can also earn points, award points, and join a points universe loyalty program. By shopping/visiting sites, these points can be used to redeem products on the Awards Store Catalogue. The AwardMaximizer tool tells you what products can be purchased with your Award Points.
Milesandpoints.com is a web service that keeps track of your miles and points in one location. The site alerts you about new promotions and offers based on your preferences. The site also reminds its customers when promotions/miles/points are about to expire.
MilePoint.com is a website service that converts any or all of its customers' miles and points from participating frequent traveler programs into money to spend at an assortment of online merchants. Every mile point is valued at a set rate. For example, if you have 500 miles and the set rate is 0.02/mile, a customer's points may be converted in a currency, e.g. $10. MilePoint Money is used for partial payment of purchases with merchants within the MilePoint network. In addition, Mile Point permits its customers to set up accounts and to add selected LPs to its portfolio. The MilePoint website is issuered with its LPs.
The Netcentives website provides relationship marketing technologies and services creating loyalty programs for brick-and-mortar, click-and-mortar, and pure-play online companies to maximize the value of their relationships with its customers, employees and business issuers. Netcentives creates private label rewards for its clients or can have it's clients participate in ClickRewards.
None of the above described services or web sites recognize much less address the primary problem with LPs, namely that most customers do not accumulate sufficient numbers of points at which the customers can effect redemption's for the rewards. In particular, these services do not teach how points may be accumulated into one account. In addition, the above described websites do not disclose how to efficiently communicate with selected LPs, as well as to manage the liability created by the unredeemed points and, additionally, to generate new and enhance steams of revenue.